Company Reports

We view Asahi’s laser focus on the core beer business positively. The company has established strong market positions in Japan, Australia, and Europe. Most recently, it has extended its reach to the African market through the acquisition of East African Breweries. The strengths of Asahi Super Dry, the number one beer brand in Japan, should allow the company to monetize the product mix shift within the Japanese beer market.

Asahi reported its delayed first-quarter results alongside its second-quarter financial results. Revenue grew 7.7% year over year in the first half of fiscal 2026. Operating margin for the first half declined 50 basis points from a year ago.

We view Asahi’s laser focus on the core beer business positively. The company has established strong market positions in Japan, Australia, and Europe. Most recently, it has extended its reach to the African market through the acquisition of East African Breweries. The strengths of Asahi Super Dry, the number one beer brand in Japan, should allow the company to monetize the product mix shift within the Japanese beer market.

Asahi reported its delayed fiscal 2025 (ending December) financial results. Management provided an update on the impact of the ransomware attack and fiscal 2026 guidance. Revenue guidance was JPY 3.2 trillion, up 11.4%, year over year while operating income guidance was JPY 297 billion, up 60%.

Asahi has delayed its full-year 2025 and first-quarter 2026 financial reporting following the significant cyberattack on its domestic operations in late 2025. The company will host a business update conference in late May.

We view positively Asahi’s laser focus on the core beer business. The company has established strong market positions in Japan, Australia, and Europe. Most recently, it has extended its reach to the African market through the acquisition of East African Breweries. The strengths of Asahi Super Dry, the number one beer brand in Japan, should allow the company to monetize the product mix shift within the Japanese beer market.

In December 2025, Asahi announced it would indirectly acquire a 65% stake in East African Breweries, or EABL, for approximately JPY 465 billion. EABL manufactures and sells alcoholic beverages in Kenya, Uganda, and Tanzania. The transaction is expected to close in the second half of 2026.

We view positively Asahi’s laser focus on the core beer business. The company has established strong market positions in Japan, Australia, and Europe. The strengths of Asahi Super Dry, the number one beer brand in Japan, should allow the company to monetize the product mix shift within the Japanese beer market.

Asahi announced that it was hit by a ransomware attack on Sept. 29, 2025. This attack led to major system malfunctions across Asahi’s domestic operations, affecting order processing, product shipments, and disrupting production at most of its 30 food and beverage production facilities in Japan.

We view positively Asahi’s laser focus on the core beer business. The company has established strong market positions in Japan, Australia, and Europe. The strengths of Asahi Super Dry, the number one beer brand in Japan, should allow the company to monetize the product mix shift within the Japanese beer market.

Aashi's first-half 2025 revenue fell by 1.4% year on year, while operating profit fell by 5.4%.

Asahi's first-quarter organic sales and operating profit increased by 2.6% and 4.8% year on year, respectively, driven by pull-forward demand in Japan ahead of its April price hikes. Declining Australia volume still weighed on margins in the region.

We view positively Asahi’s laser focus on the core beer business. The company has established strong market positions in Japan, Australia, and Europe. The strengths of Asahi Super Dry, the number one beer brand in Japan, should allow the company to monetize the product mix shift within the Japanese beer market with the convergence of excise taxes for beer and beer-like beverages.

Narrow-moat Asahi and Kirin reported their fiscal 2024 results (ending December 2024) with operating profit for both companies trailing our estimates. Asahi’s profit miss was primarily due to the Australian beer segment and group-level business integration expenses, whereas Kirin’s miss was attributed to recognition of losses in previously held shares associated with the Fancl acquisitions. Our take on the two companies’ earnings is different. We continue to hold a more constructive view on Asahi given the progress seen in its premiumization and product diversification in various key markets. As for Kirin, in our view there is many moving parts with regards to integration of newly acquired Blackmores and Fancl as well as higher research and development costs for the pharmaceutical segment. We like Asahi’s strategic focus on premiumizing its core beer business and the progress in broadening categorial coverage in Australia, the latter of which should revive profit growth in the medium term.

We view positively Asahi’s laser focus on the core beer business. The company has established strong market positions in Japan, Australia, and Europe. The strengths of Asahi Super Dry, the number one beer brand in Japan, should allow the company to monetize the product mix shift within the Japanese beer market with the convergence of excise taxes for beer and beer-like beverages.

We transfer coverage of Asahi Group Holdings and Kirin Holdings, keeping their narrow moat ratings. We view the key competitive advantages of the two companies’ brewery businesses as entrenched retailer relationships supported by strong brand portfolios and extensive distribution networks. Our fair value estimates for Asahi and Kirin remain unchanged at JPY 2,200 per share and JPY 2,600 per share, respectively. While we believe both companies’ shares are undervalued, we prefer Asahi over Kirin due to the former’s focus on its core beer business as well as its leading market positions across Japan, Europe, and Australia, which should support margin expansion in the long run.

We view positively Asahi’s laser focus on the core beer business. The company has established strong market positions in Japan, Australia, and Europe. The strengths of Asahi Super Dry, the number one beer brand in Japan, should allow the company to monetize the product mix shift within the Japanese beer market with the convergence of excise taxes for beer and beer-like beverages.

Narrow-moat Asahi Group’s September-quarter earnings were mostly in line with our expectations. The European beer business posted strong growth thanks to price hikes and better cost control. The domestic business was still somewhat bumpy, while the Australian beer business continued to struggle. Management noted the challenge to achieve its full-year operating profit guidance, which we think would be mainly due to its Australian business. We maintain our 2024 operating profit projection, which is moderately below the company’s guidance. Our fair value estimate remains unchanged at JPY 2,200 per share, which implies 17 times 2025 price/earnings, 10 times enterprise value/EBITDA, and a dividend yield of 2.2%. We view Asahi’s shares as undervalued, given its long-term competitive advantages in domestic and overseas beer markets.

Asahi is pinning its hopes on premiumization and global expansion to reinvigorate growth. The acquisition of SABMiller’s brands in Europe is a key stepping-stone to establishing its presence in the global premium beer market. Concurrently, the group intends to enhance profitability by rationalizing cost structure through supply chain optimization and price hikes. Management has a proven record of cost-cutting. Whether it can continue a mid- to high-single-digit profit growth rate will depend on continued expansion of the premium offerings. Unlike rival Kirin, which is looking for new revenue sources outside the shrinking beer market, Asahi is determined to stick to its core business. Asahi is targeting opportunities in the premium beer category not only because of the ongoing premiumization trend globally, but also because the strategic direction bodes well for its strengths in Asahi Super Dry, the number-one beer brand in Japan.

Narrow-moat Asahi Group Holdings’ announcement to boost shareholder returns with a program consisting of dividend hikes, a share buyback, and a stock split, came earlier than our expectation. Meanwhile, the profit upward revision was expected. We foresee improved financial health will continue to bolster shareholder returns, which were constrained by a priority of debt repayment. While the 2024 profit target looks achievable, sluggish demand in the lucrative Oceania market and forex movement are key threats. We have fine-tuned our foreign-exchange and gross margin assumptions, which leaves an immaterial impact on our fair value estimate of JPY 6,600. We continue to view Asahi’s shares, trading at a 20% discount to our intrinsic value, as undervalued. Our net profit forecast for 2024 is a touch above the renewed guidance.